The "War for Oil" Comes Home

Chris Floyd
Empire Burlesque
Nov. 01, 2006

U.S. Drops Bid Over Royalties From Chevron

The "War for Oil" is not just being fought in Iraq, you know. For as the Warmonger-in-Chief never tires of telling us, the "Homeland" itself is a major front in his never-ending war on – not terror, because his policies are fomenting and exacerbating terrorism around the world – but on anything and everything that might impinge in the slightest degree on the profits, power and privilege of the tiny clique of predatory elites that he represents.

The NYT story, an excellent piece of explanatory journalism by Edmund Andrews, lays out the details of the scam – just one of many by which Big Oil uses its hired hands in Washington to cheat the American people out of billions of dollars in fees and royalties from the use of public land for corporate profit. As Andrews makes clear, the entire system is honeycombed with sweetheart clauses and deliberate ambiguities that allow the oil barons to take vast rake-offs – some of which they obligingly return in various forms of baksheesh to their political servants.

We hear a great deal – and rightly so – about the pernicious evil in the Bush Regime's attempt to wrest away the oil wealth of the Iraqi people and hand it to corporate cronies. But of course this was done to the American people long ago, and is still going on today. It's just the way the business works: gouging the rubes and dodging the law (or in most cases these days, simply writing the law yourself and ordering your flunkies in Congress and the White House to enact it). Only last week, ExxonMobil announced quarterly profits of $10.49 billion. That's profit, pure gravy, from a single quarter – and what's more, a quarter when the price of oil actually went down. It was the second highest quarterly profit ever recorded by a company in world history, surpassed only by the $10.71 billion windfall pocketed in late 2005 by, er, ExxonMobil.

These companies and their ungodly profits are sustained at every turn by the infrastructure supported by American taxpayers. Who pays for the roads that distribute their wares? Who pays for the police, the power grid, the sewer lines, the education system, the legal system and every other element that supports the existence of modern commerce? Who pays for the armies that politicians have sent all over the world to secure Big Oil's pipelines and its ready access to the resources of other nations? Whose sons and daughters die in these military actions? Without this incomprehensively vast network of support, without the blood and treasure of the American people, the oil companies could never make a dime of profit; they'd be left with useless barrels of dinosaur juice to peddle as novelities at the county fair.

Yet not only do they reap these gargantuan private profits from public support – and from generations of politically assisted land swindles, sweetheart deals and special favors – they game the system in every possible way to escape or reduce their own contributions to the common insfrastructure. Jim Smith and Mary Jones can die for them in Iraq or Colombia; whole cities can groan under a creaking, decaying, underfunded infrastructure; but the oil barons will still slither and scheme to claw back every penny they can from the already mild obligations the system places upon them.

Excerpts from the NYT: The Interior Department has dropped claims that the Chevron Corporation systematically underpaid the government for natural gas produced in the Gulf of Mexico, a decision that could allow energy companies to avoid paying hundreds of millions of dollars in royalties.

The agency had ordered Chevron to pay $6 million in additional royalties but could have sought tens of millions more had it prevailed. The decision also sets a precedent that could make it easier for oil and gas companies to lower the value of what they pump each year from federal property and thus their payments to the government....

The reversal in the case, which involves Chevron’s accounting of natural gas sales to a company it partly owned, has renewed criticism that the Bush administration is reluctant to confront oil and gas companies and is lax in collecting royalties.

“The government is giving up without a fight,” said Richard T. Dorman, a lawyer representing private citizens suing Chevron over its federal royalty payments. “If this decision is left standing, it would result in the loss of tens of millions, if not hundreds of millions, of dollars in royalties owed by other companies.”

...While the Interior Department has sweetened incentives for exploration and pushed to open wilderness areas for drilling, it has also cut back on full-scale audits of companies intended to make sure they are paying their full share...In February, the Interior Department acknowledged that oil companies could escape more than $7 billion in payments because of mistakes in leases signed in the 1990s...In addition, four government auditors last month publicly accused the Interior Department of blocking their efforts to recover more than $30 million from the Shell Oil Corporation, the Kerr-McGee Corporation and other major companies.

“This latest revelation proves that the Bush administration is incapable of preventing big oil companies from cheating taxpayers,” said Representative Edward J. Markey of Massachusetts, a senior Democrat on the House Committee on Resources. “The public has been systematically fleeced out of royalties that these companies owe for the privilege of drilling for oil and gas on lands belonging to all of us.”